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Author: linas100 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121061  
Subject: Filing a net loss on Sched C Date: 1/25/2005 2:18 PM
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I have about $1000 of schedule C income from 2004. I am an MD and worked some moonlighting shifts at another hospital. Given all of my licensing fees etc. (>$1000 in 2004), I could report a net loss on sched. C. I could report an even greater loss if I also deduct out some portion of my cell phone, car expenses, etc. I feel that the expenses are legitimate, as they are related to conducting my moonlighting business. I will not, for example, try to deduct home office, as I do not use my office space exclusively for business.

Alternately, I could reduce my sched. C income to some small but >$0 amount, and take some deductions on sched. A (license renewal etc.).

I have heard rumors that reporting a loss on sched. C is a flag for potential audit. How would this board suggest I proceed?

Thanks
B
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Author: dusty2004 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75802 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/25/2005 2:27 PM
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B:

Filing a loss on schedule C is not in and of itself a flag for a potential audit. There is more to it than that.

Your licensing fees - would that fee be just for the hospital where you moonlight or for both? If both it would be prorated.

Cell phone - Is it required by the moonlight hospital or for your convenience? Do you have a second phone?

Car expenses - You can deduct actual expenses, depreciate your vehicle or use the standard milage. Most people I deal with use the standard milage but it depends on numerious issues. You can only deduct those miles that you use the car for business. Going from one hospital to another. Not from your home to the hospital.

Home office - Smart to not take if it a mixed usage. IRS does look at that one.

Sounds to me like you could use some professional Tax help. May want to find someone and sit down and talk to them.

Dusty

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75803 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/25/2005 2:31 PM
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I have heard rumors that reporting a loss on sched. C is a flag for potential audit. How would this board suggest I proceed?
__________________________
I wouldn't call it a rumor, although the exact selection criteria aren't published, I think it's true enough.

How do you make most of your money? You refer to "another hospital".
Are you a hospital employee? Are you a resident? It sounds like you're not in private practice. If you are, then all of those kinds of expenses would be deductible on your normal schedule C (or other business return, as applicable).

If you got audited, you'd probably be stuck pro-rating your licensing, telephone, and other costs. But some of it should be good.

Bill

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Author: linas100 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75804 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/25/2005 2:48 PM
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Thanks Bill and Dusty.

to answer your questions...

I was a resident and am now a fellow (next level of training after resident).

I have thought about getting some help with this, but at the risk of revealing myself as a true geek, I kind of enjoy working on my taxes and doing so helps me to keep more in touch with my finances for next year. Further, this $1000 of schedule C income is the only part of my return that is not strait forward, so I question if paying the professional fees are worth it this year.

I had to apply for my first ever license in order to start moonlighting. Thanks to the state of MA, I also had to apply for my first renewal in 2004. The only reason that I needed the full license in 2004 was to moonlight. I cold have stayed on my trainee license and kept working my day job (being a resident). I then needed to apply for the license renewal in order to keep my full license, which is required by my fellowship. Thus, I think I am within the law to say that 100% of my initial license fee was for moonlighting. The renewal would be prorated and the fraction attributable to moonlighting is too small to make it worth while taking the deduction on sched. C.

If I can take 100% of the first fee toward sched. C, I would ignore cell phone, car, etc b/c I would have the income down to about $400 and would, I believe, avoid paying soc sec./medicare taxes.

Reasonable?
Ben

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75813 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/25/2005 6:23 PM
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If I can take 100% of the first fee toward sched. C, I would ignore cell phone, car, etc b/c I would have the income down to about $400 and would, I believe, avoid paying soc sec./medicare taxes.

Reasonable?


It is to me.

Phil

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Author: 5000fingers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75814 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/25/2005 6:58 PM
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How are you paid by the hospital where you moonlight? Are you on their payroll? If you get a W2 (as opposed to a 1099-MISC, for instance) from them, you are merely their employee and therefore your income is treated the same as your regular job. And as such your expenses that relate to that job are not deductible as profit/loss on a Schedule C. Part-time/full-time makes no difference. Schedule C is only for when you are in business for yourself, not for when you are an employee.

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Author: Foolferlove Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75830 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/26/2005 5:10 PM
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Car expenses - You can deduct actual expenses, depreciate your vehicle or use the standard milage. Most people I deal with use the standard milage but it depends on numerious issues. You can only deduct those miles that you use the car for business. Going from one hospital to another. Not from your home to the hospital.

I have a followup question about this. Most of my friends are medical residents and fellows who moonlight. And they ALL deduct car expenses for their moonlighting.

They all have "day jobs" and get paid on a w-2, but then they take on moonlighting positions and get paid with 1099s (actually, several of them DON'T get 1099s from the firms they moonlight with, dispite earning thousands of dollars a year...but that's another story I guess).

Anyway, I was under the impression that you could not deduct a drive TO work as a business expense. So this should apply to "moonlighting" as well, right? My friends insist I am wrong and use the "everyone I know has done it this way for ages" method to back themselves up. Try as I might, I could not find anything in an IRS publication to back myself up. Can anyone point me in the right direction?

Also, it shouldn't matter if the moonlighting gig is "out of town", should it? I.e if your commute to get to the 2nd job is 2 hours?

Typically, everyone leaves from home. But occationally some leave from their main job and go direct to their moonlighting job. Does this matter?

This question is in the "settle a bet" category. Even with documentation I don't think my buddies are going to change their reporting methods. But I figure before I tell them that what they are doing is incorrect I need to have full command of my facts.

FFL

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Author: millerpim Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75831 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/26/2005 5:20 PM
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I'll tell you how I do it. If I am, say, downtown shopping and get a call to show a property, I will immediately write down (in a book I keep in the car) my beginning mileage from that location. When I arrive home (after my showing), I write down the ending mileage. In a separate column, I write down the total business mileage for that particular day.

I do this every day. At the end of the month, I total the monthly mileage and put it in Quicken.

At the end of the year, I note my beginning year mileage and year-end mileage and subtract the latter from the former. That gives me the total mileage for the year. From that figure, I deduct all 12 months of business mileage, and that leaves me with the personal mileage, so I can see what % of time I use the car for business. Although, at this time, I do not depreciate the vehicle. I simply use the business mileage for a tax deduction.

elizabeth

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Author: xraymd Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 75832 of 121061
Subject: Re: Filing a net loss on Sched C Date: 1/26/2005 5:29 PM
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Greetings, Foolferlove, I can't say that I did this the right way or not but when I was moonlighting as a medical resident, I used to tote up the round-trip mileage from my base hospital to the hospital I went to moonlight at, since the base hospital was where I considered my principal place of employment to be - plus I actually went back to the base hospital for the next day's work. (I did not include round trip mileage between home and the base hospital.) Then I deducted this mileage as a business expense on Schedule C. Nobody came after me to say this was wrong. If I am at risk for an audit based on this mileage deduction, I'd love to know about it!

xraymd

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Author: Fletch52 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 77574 of 121061
Subject: Re: Filing a net loss on Sched C Date: 3/11/2005 7:44 AM
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I will try to address the transportation deduction for self employed persons. Unless you have a home office when you drive from your home to your first job this is commuting mileage and is not deductible. Mileage from first job to second job is deductible business mileage. All travel between job locations is in fact deductible. The final trip from last job site to home again is commuting mileage and not deductible.

An exception would be a temporary assignment. If the assignment is expected to last less than a year and you also have a regular place of employment you may deduct your travelling expenses to and from this temporary work place.

Fletch52

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